Now the cryptocurrency market is experiencing a stage of decline, which is commonly called crypto winter. And if some investors sell their crypto assets in a panic in order to somehow save their money, others consider this situation in the market as an excellent opportunity for successful investments.
It is no secret to anyone that cryptocurrencies are extremely volatile and experienced crypto investors are already used to wild price fluctuations and 80% drawdowns.
This price behavior is typical for a new and still nascent asset class. Where some investors lose money in a panic, others see huge and unlimited prospects.
The latest analytical report by Grayscale Investment provides interesting food for thought, indicating that the current bear market may last another 250 days if previous market cycles repeat.
The cryptocurrency market, as well as classical markets, is characterized by cyclical movements. Bitcoin's market cycles typically last 4 years or approximately 1,275 days.
Such knowledge of the market and analysis of cryptocurrency cycles is an excellent investment opportunity. According to Grayscale's calculations, the market decline will last another 250 days if the duration of the previous cycles repeats this time.
Cryptocurrency Market Cycles
This Grayscale calculation is based on historical analyses of previous cycles.
The 2012-2015 cycle is characterized by the fall of the dark web marketplace Silk Road and the bankruptcy of the exchange, which led to the first major bear market.
The subsequent development of Ethereum, large exchanges and wallet providers following the fall led to a gradual rise to new highs in the market.
The years 2016-2019 will be remembered for the boom of Initial Coin Offerings - ICOs, which became possible thanks to appear of smart contracts on the Ethereum blockchain.
Most of the capital that was attracted to the cryptocurrency ecosystem at the end of 2017 was lost the following year when the second major bear market began.
The 2020 market cycle will be remembered for the advent of NFT, DeFi, and the widespread use of leverage and other tools that DeFi offers.
Investors actively used the money received as measures to stimulate the economy during the Covid-19 pandemic, investing it in high-risk cryptocurrency instruments, thanks to which the crypto market would grow at a rapid pace.
The growth of cryptocurrencies has led to the fact that many investors have used digital assets as collateral. When cryptocurrency prices fell, there was a cascade of collateral liquidations. As a result, BTC has fallen from a peak in November 2021 of $64,800 to its current values.
In 2022, the markets suffered from leverage again. Centralized platforms faltered after attracting large investments with attractive returns, unable to cope with the payment of profit interest.
The collapse of the US Terra (UST) stablecoin accelerated the decline of the ecosystem. Positions with excessive leverage were liquidated on various CeFi platforms. This exacerbated the sell-off in the market and led to the bankruptcy of large capital lending companies such as Celsius and Three Arrows Capital.
Despite the general decline in the cryptocurrency market, Grayscale analysts believe that the technology underlying the entire industry has the potential to revolutionize all aspects of digital life, from fintech to entertainment.
In the 40 years that have passed since the advent of the Internet, cryptocurrencies have become a new breakthrough technology that can change the world.
Attention should also be paid to the speed of technology development and its spread around the world. What started as a hobby project of an anonymous cryptographer is now benefiting countless industries around the world.
Blockchain technology helps to ensure financial accessibility and equity in developing countries, stimulating innovations and advancing progress towards a new phase of Internet development, where the ownership of digital assets and items does not depend on centralized authority.
Every market cycle that the crypto industry has gone through has made the ecosystem stronger, giving people new opportunities. In the crypto industry, every failure and fall did not become fatal for the industry, but, on the contrary, was a new step on the way to future prosperity.
Despite the decline in prices, liquidations and volatility, the crypto industry continues to build and innovate, pushing the boundaries of what is possible.